Mr. Sean Peasgood reports

SPECTRA7 ANNOUNCES FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2016

Spectra7 Microsystems Inc. has released its audited financial results for the year ended Dec. 31, 2016. A copy of the audited consolidated financial statements for the 12-month ended Dec. 31, 2016, prepared in accordance with international financial reporting standards and the corresponding management discussion and analysis, will be available under the company's profile on SEDAR. All amounts are in U.S. dollars unless otherwise noted.

2016 highlights

• Revenue for the year ended Dec. 31, 2016, was $8.6-million, as compared with $4.2-million in the previous year, representing an increase in revenue of 104 per cent.
• Revenue for the fourth quarter of 2016 was approximately $2.5-million, representing an increase of 135 per cent over the prior quarter and 58 per cent over the same period in the prior year.
• Gross margin as a percentage of revenue for the year ended Dec. 31, 2016, remained strong at 58 per cent and consistent with gross margin percentage of 60 per cent in the previous year.
• Gross margin percentage for the three-month period ended Dec. 31, 2016, at 60 per cent was higher as compared with the gross margin percentage in the same period in 2015 of 46 per cent.
• The company experienced significant revenue growth of almost 200 per cent in its augmented reality/virtual reality (AR/VR) portfolio during 2016.
• On Sept. 26, 2016, the company announced the appointment of Raouf Halim as chief executive officer, replacing the former chief executive officer, Tony Stelliga, who passed away unexpectedly in May, 2016.
• The company raised gross proceeds of $6.7-million (Canadian) in October from a bought deal public offering of common shares, including an investment of $1.2-million (Canadian) by its chief executive officer, certain board members and insiders.
• In 2016, the company secured multiple, material design wins with Tier 1 customers spanning both AR and VR markets as well as the emerging MR (mixed reality) market.

Subsequent to year-end

• The company continued to announce, demonstrate and ship new products during 2016 and through February, 2017, including the demonstration at CES 2017 of its 38-gigabit-per-second active cable module set and its first data centre products for 400G Ethernet applications at the DesignCon show in early February, 2017.
• The company begins 2017 with record high shippable order backlog.

Chief executive officer commentary

"I am delighted with the outstanding growth delivered by Spectra7 in 2016, despite a soft Q3," said Raouf Halim, chief executive officer of Spectra7. "Revenues more than doubled over 2015, driven by almost 200-per-cent revenue growth of our industry-leading portfolio of ultralight, ultrathin active cable solutions for the AR/VR market.

"As we start 2017, we expect continued strong growth driven by our Tier 1 customers in our core VR and AR markets, coupled with the emerging MR (mixed reality) market," continued Mr. Halim. "Finally, I am very pleased with the positive early acceptance of our innovative GaugeChanger Plus technology for the burgeoning data centre market opportunity."

About Spectra7 Microsystems Inc.

Spectra7 Microsystems is a high performance analog semiconductor company delivering unprecedented bandwidth, speed and resolution to enable disruptive industrial design for leading electronics manufacturers in virtual reality, augmented reality, data centres and other connectivity markets. Spectra7 is based in Palo Alto, Calif., with design centres in Markham, Ont.; Cork, Ireland; and Little Rock, Ark.

We seek Safe Harbor.